Sorry, I misunderstood you. I thought your statement "all fiats eventually go to zero" was your way of saying fiats suck, we shouldn't be using them, the dollar's going to zero, buy a farm and start using barter. You were just making a statement, sorry I misunderstood the intent of your statement.

You did get me thinking though. I'm thinking why does a fiat go to zero, whether it takes 20 years or 200? Seems to me it's because the politicians promise more than they can deliver without spending more than they take in. So they print. And then the next question is "why do the politicians promise more than the government's income can pay for?" And the answer is because the VOTERS tell them that's what they want.

So it's not fiat currencies fault that they get printed into oblivion, but rather the politicians and ultimately the voters. Seems like the only fix is to either write into the Constitution that federal expenses cannot exceed tax revenues, or force the issue by using a currency backed by something of value.

By the way, I doubt I have more faith in the dollar than you do. It's just that living in the US, I haven't figured out a way to not use dollars.

Can you give me an example of a currency that was backed by gold that got debased and as a result that country experienced inflation? And did that currency eventually go to zero?

How would that work, that a currency that's backed by gold would get debased? Wouldn't users of the currency be able to go to their government and exchange the currency for gold? And if so, wouldn't that keep inflation in check?

"FWIW gold backing has never prevented a country or empire from debasing the currency.

Human nature will always find a way to try to get something for nothing...and it will always lead to a big mess."

Which is why we don't need a gold standard currency system, we need to use gold AS money, which would only come about via a free market in money. In other words, we would quit quoting prices in currency terms (dollar, euro, real, etc.) and instead use actual units of weight of gold.

PC, the proof is in the pudding. Every major currency today that was around 100 years ago was backed by a gold standard. One by one the politicians took the gold backing away, sometimes in one fell swoop, other times via incremental steps.

Gary, using gold as money doesn't mean carrying around physical gold. The gold could be kept on deposit in a bank (warehouse), and the receipts used in commerce. Electronic transfer of gold ownership would be possible also. James Turk's GoldMoney is an excellent example.

PC, absolutely right. Which is why legal tender laws should be trashed and people be allowed to determine what they want to use for money. Get the government out of the money business. Everybody believes that there is some great voodoo behind money that requires that government experts manage it.

And, unfortunately, writing 'no devaluation' into the constitution wouldn't do much- the constitution has been little more than silly putty since judicial activism breathed life into the idea of a 'living, breathing' constitution.

Gary, I think a gold standard is somewhat likely in the future, probably during my lifetime, but I'm fully aware that the repeal of legal tender laws are unlikely, as much as I'd like to see that happen.

This is broadening the scope of the discussion we're having, but the points you make about human nature and politicians are exactly why I believe democracy is a fundamentally flawed system. That has lead me to advocate anarcho-capitalism as the best way for a society to be ordered. (But I realize it THAT won't happen.)

A balanced budget is a red herring. Congress could tax everybody in the private sector 90% and have a balanced budget. That would not negate the evil inherent in a system based on forcibly taking from some and giving it to others.

Answer - the absence of government itself. Corporations and wealthy individuals engage in regulatory capture, in which they use their wealth and influence to harm us.

Think of Goldman Sach's influence at the Federal Reserve, the Treasury, and at the highest levels of governments all over the world. As long as there is government, there will be people who seek to influence it at the expense of others. The idea is to take away the gun (the state) they use against us.

I know our stops are based on gold. Now my question is if that's hit, get out of everything right away or see what my AGQ etc. was at that level previously and then use that price as my stop? I hope that makes sense.

Ryan, I called my broker and had them walk me through putting in sell stop loss market orders for my options and other stocks (ie AGQ, SIL) using stop market triggers if GLD hit the trigger price Gary gave us. Easier than guessing what the others would be. Call them in the morning before the market opens.

It seems you're talking about delivering us from one form of oligarchy into the hands of another.

In a nation without any laws or regulations whatsoever, the likes of Goldman (or whoever had a private militia) could simply seize assets at will -- your home, your money, etc.

As it stands we are already living under a form of oligarchy, where as you point out the Goldmans of the world buy and sell politicians and write legislation at will. But it's hard to imagine how removing what few constraints remain will suddenly turn them into benevolent dictators. More likely it would turn the US into something like Russia.

It may be that we're headed for anarchocapitalusm as it is, but I doubt that it will feel like a utopia unless you're Lloyd Blankfein.

Except that the government that the oligarchs have so firmly in their control is the very organization that prevents us from defending ourselves against the...oligarchs. Government is based on the "legitimate" use of non-defensive force. You can't fight back and defend yourself when they say someone else is allowed to rob you.

A life of freedom and liberty is not a riskless endeavor. There's the chance that stuff might happen that you don't like. But I'd rather live free in a dangerous world than securely under the thumb of the paternal state.

I don't even know if I can do that at my broker. But I don't know if I want to, I'll just it has a mental stop and see how the action plays out before selling out. I guess that kind of answers my question, if our stop in gold gets hit, sell out of everything at market price at the time not what the previous price of AGQ etc. was.

Gary, you mentioned the 'exhaustion' candles in the NDX but you did mention the possible exhaustion candles in Gold, XAU & HUI when they occurred last week. Were you looking through the rose colored lenses of hope?

Just asking, not needling.

Also, have you possibly overlooked a coil forming on the silver chart? If so, your coil theory says the first move will be reversed. So it is possibly looking like silver will break down before making new highs?

"I certainly like the part where they don't control the government anymore.

But it seems a little idealistic to think that they wouldn't then use their vast resources to simply expropriate wealth from the rest of us."

David, the history of the state is one in which the government enables the very people you fear to take advantage of you. They are already doing what you contend they would do in an anarchistic system. But because the state has the monopoly use of force, if you fight back sufficiently, the state will kill you. Democracy is a system built upon force and coercian. Not exactly a civilized way to construct a society.

Don't let David fool you, he loves the current system and why not? It's been good to him as he's a multi-millionaire, and has even stated he supports a strong US presence in the Middle East (and now we're in North Africa via Libya). American resources securing Israel's backyard, without Israel spending a dime! :)

Gary or others - Question on Gold stops:I am still confused on which pricing for gold to use for a stop. The Stockcharts.com "$Gold" only gets updated at the end of the day so can't use that intraday (I don't want to wait overnight to reduce positions if the stop is violated). Should we be using the spot gold price (Kitco) or the continuous futures contract "/GC" that some of us track on Thinkorswim? -- those prices can vary widely some days.

Also, I assume if the stop is violated we go back to a core position or are there other strategies to consider?Thanks.

I don't know if you're a subscriber or not, but your (occasional) comments have been universally negative when it comes to precious metals. Not of the "SELL! SELL! SELL!" variety, but more subtle - a comment here and there, always when there is a opening to promote a view of continued weakness.

Maybe your name is just getting to me, but are you by chance a genuine troll? I've never actually met one, and it seems like a pretty good gig- I'd love a referral if you're hiring. :)

Mission,Yes it is a 2b. Moving below $1382 would complete the 1-2-3 reversal.

At that point I would exit all precious metal positions and we would unfortunately have to be satisfied with the gains we've made as the odds would then be that the intermediate cycle has topped in a left translated manner.

Would I be disappointing? Yes certainly. I think we all would be. We were all looking for one more big leg up. But the reality is we've all made a ton of money in the last 6 months and I can be satisfied with that.

There's also IAU with a lower share price and it tracks gold accurately as well.

I am using deep in the money call options on GLD for the portion of my portfolio I want to have in gold. But if you do that, be careful. It's easy to get leveraged that way because each DITM call option controls 100 shares of GLD and you can buy a DITM call option for a fraction of what you have to pay for 100 shares of GLD.

There has to be a tremendous amount of political pressure to keep the dollar from sinking. The Fed is certainly aware of the consequences which ironically is the basis of our strategy. How long before reality overcomes the political? That is the question before us.

It's my belief that the Fed cannot and will not stop QE2. The continued weak housing data, unemployment, Europe, Japan, etc all portend continued weakness. So they are doing the next best thing to keep the dollar from shooting downward- they are jawboning - making noises about ending QE2 as if it were a legitimate option they would take. It is no accident that multiple Fed presidents emerged within 1 day of each other with basically the same message, that QE2 might need to end.

Politically, however, the end of QE would collapse equity prices and this close to the 2012 elections, begin to shift sentiment against the current administration - something the Fed never wants to do.

So they are playing a cat and mouse game to try to get an orderly dollar decline. This will only work for so long, IMHO.

The true test of the PMs will be in early April after all the eom Comex stuff is past us.

Would someone be so kind to explain to a dumbwit why (Gary) "the only real negative it the degree that silver is stretched above the mean"? Which mean is that and what symbol should I use in stockcharts.com to see it?

Just a thought ahead of time for everyone: The closer gold gets to $1382 (which it hopefully won't!), the better the trade that gets setup. For myself, if we get down there I will but a ton at, say $1390, with a stop at $1382. If we hold you make a killing, if not you lose nickels. Tight stop opportunities are not to be wasted as the risk/reward is tremendous.

archrival: You just make yourself look silly with comments like that to SB. He has made more money in miners than you probably will in your whole life (as have many, many people here). Stocks may or may not go up, but why talk to others that way? You will never get any respect here with nonsense like that and you really do make yourself just look ridiculous. I laughed when I read what you wrote.

Since Gary is gone I can say this: If you want to be short something, consider the Q's The reversed from a high of 57.22 and are close to that now, so a good play would be shorting near that number and covering immediately if they tick above it negating the reversal. Discipline is required! But you know exactly what your risk is (not much) and the gain would be many times that risk. If the Q's drop much, put in a mental stop at your cost.

I am not sure that you can use the actual gold for a stop. The idea of a stop is that if the actual gold price drops below $1382 then you would want to get out. In order to facilitate the stop you would use the equivalent GLD reading.

I believe technicals are open for interpretation 86. Infact i would go as far as to say that technicals are purposely random in terms of reliability. Check out www(dot)effectivevolume(dot)eu or www(dot)alphascanner(dot)com (check out the blog)

archrival: My point is still the same regardless. Why come on here with an attitude? If you want to contribute, do. If you want to learn, do. Otherwise what's the point? "Hey, look what you're missing!" is not helpful. He asked for names of stocks you are buying and you still haven't said. That might (might) actually be useful. "Dow 15,000 here we come!" is not. Beanie was a real pain like that which is why he is starting to call you that. (Hopefully he has left) Useful contributors are always welcome.

Matthew: Conditions are always changing. "What happened to..." just means things have changed. The HUI breakout failed. That's new and requires a change of attitude. Ignoring new information will make one poor. Very few here are traders, BTW.

Your comment provoked a thought. The question i have is what information constitutes a change of plan and what information does not. Because on the one hand if we took all new information then we would be traders so as investors what would you consider as information that qualifies. So would you say that the only information that qualifies as investor is "price"?

I was one of them screaming, but no day trading. My comments, were based on a new gold cycle that had just begun in conjunction with a dollar drop. If this was going to be the start of a blow-off top and one of the last couple of daily cycles for this entire C-Wave, it would have to explode at that point, IMO.

It's still not too late of course, but with the cycle starting to get deep into the count, an upside explosion becomes less likely, quickly. That's not to say the picture is bearish, far from it and nothing sold, stops are in place. Just will require more patience. Of course Gary is the one to listen to, the rest of us do throw off a lot of noise :)

Hmmm..Thanks DG. I guess I am trying to put Gary's nightly writings in perspective. A couple of days ago it was this train is leaving get on and yesterday it was uh it might be time to get off..that to me seems like a trader. an investor would say here is the market info and this is not easily going to change in the next 3-6 months (whatever time frame). this is how you should invest...

ahain: No there are lots of things that inform my decision, including volume, various divergences, response to news, etc. Even a non-trader is often deciding whether to add and how much. Taking information does not necessarily mean acting on it. As well, it is helpful to be mentally prepared for things that may soon come to pass. The key is to have a scenario in kind, but hold it loosely. Kind of like skiing: you know where you are going but need to be relaxed enough to handle bumps that show up. At least this is how I do it (I both trade and hold). The "Plan" is a stop at gold $1382, but there is lots of dancing around that that can happen.

Matthew: Gary has NOT said to get off. He is simply saying what events need to happen to know it is time to get off. If he stayed enthusiastically bullish every day, regardless of what was happening, and then one day (when the stop was hit) said "O.K. now sell everything" he'd seem crazy. I prefer to get the PM's temperature taken often. No action has been suggested.

Thanks..Not trying to inflame anyone just trying to make sense of the methods here and what I have gathered so far... So basically stops are set at 1382 for gold..not sure what stops are in place for miners... so if that is taken out then it is official that it is time to take what you have off the table?? I assume that it is a touch stop not a 15 min bar below, etc.

Intern: I am not all in and virtually never are. I have two kinds of positions: tight stop trades and longer term holds. The PM's are longer term, for example. XLE short was done for a chart reason so the stop is when the pattern is violated. I'll take almost any trade if there is a good natural nearby stop because my risk is tiny. Once I get way in the black I have room and can let things move around (like AGQ), but I never take get into a situation where I show a large loss, regardless. A lot of my work revolves around entry points so that doesn't happen.

Matt: If you are not a subscriber you should be. It's the best money you'll ever spend and you will always be lost and a little behind trying to trade off the blog. I have made a pile off it and have been trading for decades. Improved my game a ton.

Jeff: No firm answer as to how to buy a breakout. There are a number of ways each of which is reasonable and each of which has drawbacks and advantages depending on what your reasonable goals are (re risk, maximizing gain, etc.) Gary'll let you know when he would do it.

Put my stop on AGQ at 208. I'm not willing to ride it all the way back down to 174. The test of breakout should hold us, SLV 35.75ish. If it doesn't, I want out and will reassess the landscape at that time.

Thanks Eamonn. No I hold down a career in the financial enterprise software space.

There are many bright and talented people on this blog, starting with the blog owner. I read a lot, all the time, so most of what I say is probably just other peoples thoughts :) I like to keep an eye and ear on the pulse of the tape, that has always been of interest to me.

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